NFI Group (TSX:NFI) gave investors something to celebrate last week as the company announced earnings that blew past estimates. Analysts and investors alike were impressed with the news, which showed continued momentum for the stock. So let’s get into what investors should know about NFI stock, and whether it’s time to buy.
What happened
Shares of NFI stock rose after reporting a net loss of US$9.4 million during the first quarter. This was still a major improvement, given that the company had reported a loss of US$46 million just a year before. The bus maker stated that its net loss per share came down to just US$0.08, again a major improvement compared to the loss of US$0.60 the year before.
Furthermore, the stock reported revenue from transit buses of US$449.5 million, which was up almost 66% year over year. Plus, manufacturing revenue also increased 46%, thanks to more vehicle deliveries and higher average sale prices.
Analysts weigh in
Analysts were quite pleased with the results, stating that there continues to be “exceptionally strong” visibility for bus deliveries, higher pricing, and earnings before interest, taxes, depreciation and amortization (EBITDA).
There should therefore continue to be growth through 2025 and beyond, especially on the back of higher prices. In fact, this should continue even with competitive changes occurring across North America. This competition relates to the United States market for heavy-duty transit buses, in the words of one analyst.
In this case, there are really only two options, and NFI stock is one of them. Therefore, with 5,421 new orders in the first quarter, and a backlog of 14,783 worth US$11.6 billion, it’s looking quite good for the future of NFI stock.
What to watch
If you’re hoping for momentum to continue, there are a few items that investors should consider watching. For one, ensure the company is chipping away at its backlog, while also increasing it with even more orders.
Furthermore, keep watch on supply chain conditions. These have provided a challenge in the past, but one that NFI stock seems to have passed for now. Especially as management stated that the situation continues to improve, and this has supported NFI stock’s recovery plan.
Overall, continue to watch NFI for improvements in both demand and availability. NFI stock should be set for life if the company can keep this up, given it’s part of a government regulated duopoly. But should another company edge in on its territory, or supply constraints occur, the company could see losses climb once more.
Bottom line
NFI has come a long way since the supply-chain disruptions of the past. While still operating at a loss, it has seen massive improvement. And what’s more, the company seems to have a solid future for at least the next two years. As long as it can keep up with demand, and increase it as well, NFI stock looks like a solid growth stock to consider on the TSX today.
